Research Summary
Swedish holding company Aonic has acquired UK-based VR developer nDreams for $110 million, following an initial investment of $35 million in March 2022. Aonic’s strategy focuses on acquiring small to mid-sized companies to find value through shared services. nDreams, known for high-end VR titles such as Synapse and Ghostbusters: Rise of the Ghost Lord, joins Aonic’s diverse portfolio of creative indie studios.
Key Takeaways
Aonic’s Acquisition Strategy
- Aonic’s Investment in nDreams: Aonic’s acquisition of nDreams for $110 million follows an initial investment of $35 million in the VR developer. This acquisition is part of Aonic’s strategy to acquire small to mid-sized companies and find value through shared services.
- Shared Services Approach: Aonic aims to provide publishing expertise and shared services to its portfolio companies, allowing developers to focus on game development. This approach is similar to that of early Embracer, another Swedish holding company.
- Portfolio Diversity: Aonic’s portfolio is diverse, including PC and console developers Tiny Roar, Otherside, BKOM and Milkytea, Apple Arcade developer Red Games, and a kids’ game platform Tutotoon. The common thread among these companies is a dedication to creative indie studios.
nDreams’ VR Focus
- High-End VR Titles: nDreams is known for its high-end VR titles such as Synapse and Ghostbusters: Rise of the Ghost Lord. The company has been focusing on VR experiences since 2013 and has grown rapidly over the past few years.
- VR Market Growth: Aonic’s acquisition of nDreams is based on the expectation of further growth in the VR market. The installed base of global VR headsets has surged since 2019, with estimates suggesting that active headsets from all manufacturers combined will reach 46 million by 2024.
- VR Market Challenges: Despite the growth in VR headset usage, engagement on VR compared to other forms of gaming is still low. Additionally, VR revenue is heavily subsidized by hardware makers like Meta and Sony, and the hardware market is fragmented among several manufacturers.
Actionable Insights
- Understanding Acquisition Strategies: Aonic’s acquisition of nDreams provides insight into the company’s strategy of acquiring small to mid-sized companies to find value through shared services. This approach could be beneficial for other companies looking to expand their portfolios.
- Recognizing the Potential of VR: The acquisition of nDreams, a company known for high-end VR titles, highlights the potential growth in the VR market. Companies interested in VR should monitor the market closely for opportunities.
- Assessing Market Challenges: Despite the potential growth in the VR market, there are significant challenges, including low engagement compared to other forms of gaming and a fragmented hardware market. Companies should consider these factors when evaluating potential investments in the VR space.
